Tax

New Zealand's leading tax practice

Russell McVeagh's Tax team is New Zealand's strongest legal tax practice, providing a complete range of advice on all types of direct and indirect taxation.

Clients choose our Tax team for our range of expertise, depth of experience and our commitment to advancing our clients’ interests. Our tax lawyers bridge the gap between the tax and other legal issues that need to be managed in any transaction or dispute. 

Our Tax team provides advice on a wide variety of issues relating to financing and capital raising, mergers and acquisitions, business establishment and reorganisations, investment products, PPPs, employee remuneration packages, customs and excise, transfer pricing, and tax investigations and disputes.

The Tax team has participated in all aspects of the tax reform process, including appearing before parliamentary committees and making representations at ministerial level. Close involvement in the tax reform process means that all team members are familiar with the latest developments in law and procedure, and have a full appreciation of the approach of the policy makers and tax administration.

Almost every transaction the firm advises on has tax implications for our clients. That’s why our tax specialists are embedded across our practice, combining a deep knowledge of tax law with industry expertise.

The team has advised:

  • Major New Zealand banks (through the New Zealand Bankers' Association) on the tax consequences of the new Basel III based regulatory capital requirements (including working with Inland Revenue and Reserve Bank of New Zealand officials to obtain in principle guidance as to the tax consequences of the new requirements).
  • All the major New Zealand banks on their Basel III compliant regulatory capital raisings (12 transactions in total since the new rules took effect in 2013).
  • Trustpower: on its demerger through a court approved scheme of arrangement, which saw the creation of two listed companies. 
  • ANZ Bank New Zealand: on the sale of its 100% subsidiary, UDC Finance Limited, to the HNA group. 
  • Fairfax group: in relation to the proposed merger of Fairfax New Zealand Limited with NZME Limited. 
  • The ShapED consortium: on the design, finance, construction and maintenance of six new schools under a PPP arrangement with the Ministry of Education.
  • Kiwibank in respect of the acquisition by Guardians of New Zealand Superannuation and ACC of a 47% interest in Kiwibank.
  • Future Schools Partners Consortium: in connection with a PPP project to design, construct, build and maintain four new schools.
  • The SecureFuture Consortium: on its successful bid to design, finance, operate and maintain a new 960-bed prison in Wiri, South Auckland.
  • Newmont Mining Corporation on the sale of the companies that operate the Waihi gold mine.
  • Cheung Kong Infrastructure: on its acquisition of EnviroWaste following a competitive tender process.  
  • Westfield: on its 2014 restructure, involving the demerger of its Australasian business from the worldwide group and the merger of the Australasian business with Westfield Retail Trust. The Australasian business was subsequently renamed Scentre Group.
  • Scentre Group: on the NZ$1 billion sale of a 49% interest in a number of its New Zealand shopping centres as part of a joint venture with Singapore based GIC Real Estate.
  • Fonterra Co-operative Group: on its 'Trading Among Farmers' project, which involved the simultaneous launch of a new securities market known as the Fonterra Shareholders' Market and the initial public offer of the new Fonterra Shareholders' Fund (FSF).
  • Woolworths: on its establishment of Shopping Centres Australia. The spin-out involved the distribution of units in the newly established retail investment trust to existing shareholders and an initial public offer of units to other investors.
  • Meridian Energy: on the initial public offer of up to 49% of its shares by the New Zealand Government. This was New Zealand's largest ever IPO and involved the use of instalment receipts.
  • KiwiRail: on its establishment as a profit-oriented entity in 2012. The assets and liabilities of the New Zealand Railways Corporation were vested in the newly established KiwiRail state-owned enterprise, effected through an Order in Council. The team assisted with drafting special legislation to ensure that the vesting of assets and liabilities occurred on a tax neutral basis.
  • Telecom New Zealand (now Spark): on its NZ$4.3 billion demerger in 2011. Russell McVeagh acted as lead counsel to Telecom on its separation into Chorus and Telecom New Zealand, and the associated initial public offer of shares in Chorus. The demerger was required for Telecom to take part in the Government's ultra-fast broadband initiative, and was a world first for a vertically integrated telecommunications company.  
  • Westpac on the separation of its New Zealand retail banking business into a locally incorporated registered bank and on the subsequent transfer of its institutional business to the locally incorporated bank (effected by Private Acts of Parliament).
  • Auckland Transition Agency on reviewing and making submissions on legislation enacting the Auckland governance reforms, and on the tax implications of various structural proposals giving effect to those reforms.

Tax disputes

Continuing our track record of acting on the most important New Zealand tax disputes and litigation, in the last year we have acted on the Trustpower case, in which the Supreme Court gave its decision, as well as on three cases at Court of Appeal level, and several other cases before the High Court and Customs Appeal Authority. Our experience includes acting on important cases involving alleged tax avoidance, capital/revenue, transfer pricing and customs and excise issues. 

We are familiar with the different procedural options for resolving disputes, including the pre-litigation tax disputes process, litigation before the courts and the mutual agreement process in respect of double tax agreement matters. Most tax disputes do not result in litigation, however, and we have considerable experience in assisting in the negotiation of settlements with Inland Revenue and Crown Law. 

Our experience includes:

  • Acting for Trustpower in its dispute concerning the deductibility of feasibility expenditure.  The Supreme Court's decision (Trustpower Limited v Commissioner of Inland Revenue [2017] 1 NZLR 155) is now the leading case on this issue, and has resulted in Inland Revenue rewriting its interpretation statement on the deductibility of feasibility expenditure. 
  • Acting for Vector in its dispute concerning the income tax treatment of payments it received from a third party for the right to lay and install cables and other equipment in a tunnel. Vector successfully resisted Inland Revenue’s challenge to the capital treatment of the payments in the High Court and in the Court of Appeal (Commissioner of Inland Revenue v Vector Limited [2016] NZCA 396).
  • Acting for Queenstown Airport on its appeal to the Court of the Appeal concerning the ability to depreciate the costs of constructing a runway end safety area (Queenstown Airport Corporation Limited v Commissioner of Inland Revenue [2017] NZCA 20). 
  • Acting for Michael Hill in relation to litigation concerning use of a limited partnership (which was transparent for New Zealand tax purposes, but a company for Australian tax purposes). The case was resolved following a preliminary dispute, which reached the Court of Appeal, concerning Michael Hill's claim to be treated in a consistent manner with other taxpayers involved in similar disputes (Commissioner of Inland Revenue v Michael Hill Finance (NZ) Limited (2016) 27 NZTC 22,056).
  • Acting for Westpac New Zealand: in a dispute involving the scope of the Commissioner's powers to amend an assessment to ensure its correctness (Westpac Securities NZ Limited v Commissioner of Inland Revenue [2014] NZHC 3377).
  • Acting on several transfer pricing disputes, including cases in which proceedings have been filed in Court.  We have also represented clients in the MAP (mutual agreement process).
  • Acting for a multinational transportation company in relation to the allocation of revenue to New Zealand under the permanent establishment attribution rules. Proceedings were filed and the matter was effectively conceded by Inland Revenue a short time before the case was due to be heard.
  • Acting for several taxpayers in relation to intra-group financing using optional convertible notes (OCNs) and mandatory convertible notes (this has included acting on an important procedural application concerning the relationship between Inland Revenue’s information gathering powers and the discovery obligation: Radioworks Ltd v Commissioner of Inland Revenue (2011) 25 NZTC 20,014).
  • Appearing before the Customs Appeal Authority on a matter concerning excise duty liabilities (Imperial Tobacco New Zealand Limited v The Chief Executive of the New Zealand Customs Service [2013] NZCAA 05).
  • Acting for a major oil company in its proceedings before the Customs Appeal Authority concerning excise duty questions arising from the Supreme Court decision in Terminals (NZ) Limited v The Comptroller of Customs [2014] 1 NZLR 121.
  • Acting for four of the six banks in disputes concerning structured financing transactions (including two of the three cases that went to a substantive hearing (Deutsche Finance New Zealand Limited v Commissioner of Inland Revenue (2008) 23 NZTC 21,758 and BNZ Investments Limited v Commissioner of Inland Revenue (2009) 24 NZTC 23,582, as well as 17 hearings on pre-trial procedural matters).
  • Acting for several property investors in cases settled prior to hearing in respect of the income tax treatment of investments in property.

Russell McVeagh has been named 'New Zealand Tax Disputes and Litigation Firm of the Year' at the International Tax Review's Asia Tax Awards for the last three years – in 2018, 2017 and 2016.

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